Question
USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT (2) QUESTIONS: ABC Company exchanged equipment used in its manufacturing operations for a similar piece of equipment
USE THE FOLLOWING INFORMATION TO ANSWER THE NEXT (2) QUESTIONS:
ABC Company exchanged equipment used in its manufacturing operations for a similar piece of equipment used in the operations of XYZ Corporation. The following information pertains to the exchange. The exchange lacks commercial substance.
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| ABC Company | XYZ Company |
| Equipment (costs) | $28,000 | $34,000 |
| Accumulated Depreciation | 12,000 | 10,000 |
| Fair Value of Equipment |
| 28,500 |
| Cash given up | 7,000 |
|
Determine the Original Cost of the New Asset that ABC should report on their balance sheet as a result of this exchange as well as the gain or loss ABC should recognize on their CY Income Statement.
| Historical Cost of New Equipment for ABC | Gain/Loss on the Exchange |
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Using the same information presented in #9 above, determine the Original cost of the New Equipment for XYZ and the Gain/Loss that XYZ can recognize.
| Original Cost of New Equipment to XYZ | Gain/Loss to be Recognized |
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Cost Accounting A Managerial Emphasis
Authors: Charles T. Horngren, Srikant M.Dater, George Foster, Madhav
13th Edition
8120335643, 136126634, 978-0136126638
